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Income Tax Appellate Tribunal, “D” BENCH: KOLKATA
Before: Shri M. Balaganesh, AM & Shri S. S. Viswanethra Ravi, JM]
ORDER Per Shri M. Balaganesh, AM:
This appeal by assessee is arising out of order of CIT(A)-9, Kolkata vide Appeal No. 04/CIT(A)-9/Wd-33(3)/2014-15 dated 22.01.2015. Assessment was framed by ITO, Ward- 33(3), Kolkata u/s. 144/145(3) of the Income tax Act, 1961 (hereinafter referred to as the “Act”) for AY 2010-11 vide his order dated 23.01.2013.
The assessee has raised the following grounds of appeal: I. For that on the facts and in the circumstances of the case, the Ld. CIT(A) was not justified in confirming the addition of Rs.14,98,590/- made by the Ld. A.O. on account of alleged undisclosed receipts.
2. For that the Ld. CIT(A) ought to have considered the fact that the alleged undisclosed contractual receipts of Rs.14,98,590/- is included in the gross receipts or the assessee inasmuch as the total receipts as per the books of accounts is Rs.4,0 1,25,002/- which exceeds the total receipts disclosed in Form 26AS of Rs.1,11,70,542/-.
3. Without prejudice to ground no. I and 2, the Ld. CIT(A) instead or sustaining the entire addition of Rs.14,98,590/- ought to have applied appropriate N .P. percent on the said sum.”
Brief facts of this issue is that the assessee is a proprietor of M/s. A. S. Construction and the nature of business is civil government contractor. The AO observed from the P&L Account of the assessee that the total turnover of the business was shown at Rs.4,01,25,002/- and net profit was reflected at Rs.9,43,301/- which worked out to 2.35% of the turnover. Due to various deficiencies in the books of account submitted by the assessee
2 Mukul Dutta, AY 2010-11 the AO proceeded to reject the books of account of the assessee in terms of section 145(3) of the Act which point is not disputed by the assessee either before the Ld. CIT(A) or before us. The AO after duly considering the past history of the profit percentage reflected by the assessee and by realizing that the profit percentage declared in the year under appeal is least resorted to estimation and accordingly estimated the net profit of the assessee at 3.35% as against the returned profit of 2.35% and made an addition of Rs.4,01,250/-. Apart from this, the ld AO found that the assessee was in receipt of monies from Ircon International Ltd. towards contractual payments to the tune of Rs.14,98,590/-, which was also duly subject to TDS thereon, which were reflected in Form 26AS of the assessee. The ld AO brought the subject mentioned receipt of Rs.14,98,590/- to tax as unexplained credit as it was not included in the turnover disclosed by the assessee. Before the Ld. CIT(A), the assessee pleaded that the sum of Rs.14,98,590/- should not be taxed in full and instead only the net profit derived from such contract receipt should be brought to tax. The Ld. CIT(A), however, felt that the receipt of Rs.14,98,590/- was not included in the total receipts by the assessee and since all the expenses have already been claimed by the assessee in its P&L Account, no expenses remained to be unclaimed and hence, there is no scope for making addition only towards net profit thereon. Accordingly, he upheld the order of the AO. Aggrieved, the assessee is in appeal before us.
The Ld. AR argued that there is no evidence brought on record by the Ld. CIT(A) that all expenses have already been claimed by the assessee and there is no corresponding expenditure relatable to the subject mentioned receipt and grossly erred in confirming the addition made towards total contract receipt of Rs.14,98,590/-. In response to this, the Ld. DR vehemently relied on the order of Ld. CIT(A).
We have heard rival submissions and gone through facts and circumstances of the case. We find that in the facts and circumstances the ld AO ought to have added only the net profit@ 3.35% on the subject mentioned contract receipt of Rs.14,98,590/-. This addition, once made would meet the ends of justice. We also find that the AO had already made an addition of Rs.4,01,250/- towards estimation of net profit at 3.35% of turnover after rejecting the books of account u/s. 145(3) of the Act which is not disputed before us. We hold that the addition of Rs.50,202/- (i.e. Rs.14,98,590 x 3.35% ) would have to be 3 Mukul Dutta, AY 2010-11 telescoped with the addition of Rs.4,01,250/- as both the additions are on account of net profit. Hence, the net addition would be Rs.4,01,250/- minus Rs.50,202/- which would be Rs.3,51,048/-. The ld AO is directed accordingly. The appeal of the assessee is partly allowed.
In the result, the appeal of assessee is partly allowed as indicated above.